1. Insights from the real-world use of Cambridge Econometrics’ E3ME model
International Exergy Economics Workshop
University of Sussex, July 2016
Sophie Billington

2. Energy systems modelling
Current standard in energy systems modelling is by cost-optimisation
Are optimal scenarios always what policy-makers find useful?
Question behind our methodology: Is it possible to create a model that simulates the sub-optimal outcome of policy?

3. E3ME approach
Macro-econometric model based on a post-Keynesian framework
Optimisation not assumed, no general equilibrium
Demand = Supply… but
Demand <= Potential Supply
Under the right conditions it is therefore possible for regulation to increase output and employment

4. Technology Emissions Energy Economy Materials Unit: tonnes
Units: tonnes of carbon/CO2
Energy
Unit: Tonnes of oil equivalent
Materials Unit: tonnes
Economy
Unit: Euros
Environmental policies
e.g. industrial emissions of SF6
Energy use
Environmental taxes
Pollution abatement equipment
Economic policies
Demographic change
Emissions trading scheme
Energy prices
& costs
Funding R&D
Technology
Global oil price
Energy policies
investment
Energy use
Economic activity & general prices
Energy use, prices & taxes
Material use,
IO, material tax
Economic activity & general prices
Energy demand
Resource efficiency policies

5. Macroeconomic impacts of exergy efficiency improvements in vehicles
Efficiency improvements to the ICE
Low friction design/materials
Low rolling-resistance tyres
Thermodynamic cycle improvements
Combustion improvements
Aerodynamic improvements
Light-weighting
Reduced driveline friction
Optimising gearbox ratios
Start-stop hybridisation
Thermo-electric waste heat recovery
Transition to alternative powertrains eg BEVs, FCEVs

6. Macroeconomic impacts of exergy efficiency improvements in vehicles
Annual imports of crude oil
Total cost of ownership (€)